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this is "nightly business report" with tyler mathisen and susie gharib, brought to you by -- >> interactive financial multimedia tools for an ever changing financial world. our dividend stock adviser guides and helps generate income during a period of low interest rates. real money helps you think through ideas for investing and trading stocks. action alerts plus is a charitable trust portfolio that provides trade-by-tra strategies, online, mobile, social media. we are >> feeling blue.
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ibm weighs heavily on the dow. and although stocks finish higher on the day, it turns out to be the worst week of the year. and that mood permeated seemingly everyone as a massive manhunt in boston played out in front of our very eyes like some television drama. this is "nightly business report" for friday, april 19th. good evening, everyone. i'm susie gharib. my colleague tyler is off tonight. while the big story today boston, all around the country, everyone was consumed by the massive manhunt in and around boston for the surviving suspect in the boston marathon bombings. americans at work, at home, and even on the trading floors on wall street were glued to television sets for the latest news, but business did carry on. on wall street, stocks rose slightly on light volume, but three major stock averages ended with their worst week of 2013. by the closing bell, the dow wa up ten points. the nasdaq gained 39.
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and the s&p 500 added 13 points. for more on the story and the mood of investors this week, we turn now to bob pisani at the new york stock exchange. >> reporter: it was a tumultuous end to a tumultuous week, bookended by the boston marathon bombing and investigation. stocks opened mixed, with ibm down about $14 right out of the gate on disappointing earnings. ibm is a dow component, and that $14 drop cost the dow almost 100 points. but it was the ongoing investigation in boston that dominated traders' attention. for much of the day, traders stood around monitors, watching the developments unfolding. when they weren't discussing boston, the focus of the conversation was the poor performance of the markets. with the dow down roughly 2.2% this week, many traders noted that this was similar to the meager 3% pullback at the end of february, which proved to be a buying opportunity.
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but many have argued that this pullback might be different. first, this decline saw heavier volume and panic selling, particularly on monday and wednesday, when 90% of the volume was on the downside. many are now questioning whether we are still in an uptrend in the markets. second, the economic news is different. march and early april economic numbers have been weak. the final piece of the puzzle is earnings. and with only one-fifth of the companies reporting so far, the earlymixed. there is one trend. revenues have been lighter. less than one-half of the companies have been able to meet their estimates. i'm bob pisani at the new york stock exchange. >> joining us now with andrew berkeley, chief portfolio strategist at oppenheimer and company. you know, andrew, as bob pisani just reported, it was a tumultuous week. it was also a very emotional weak, not just because of the volatile swings in the market,
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but because of the terrible tragedy in boston that continues on. so when you were hearing from clients today, how were you advising them on an emotional day like today? >> yeah, well i think here in new york everyone was kind of glued to the television, but talking to a lot of colleagues in the boston area, they said it was very eerily quiet and just the lockdown was very, very strange. but when we talked to clients and investors in general, we tried to encourage them to take a longer term perspective and not get caught up in the volatility of these short-term moves. but to try to focus on the longer term fundamentals, which we still think are pretty good. the economy is still growing. earnings are still growing. the fed still pretty supportive. certainly volatility has picked up a bit this week. and we expect that to continue here in the nr term. >> that's what was going to ask you. assuming that this manhunt is solved and the suspect is apprehended this weekend, turning to monday, how do you think things are going to play out? what is going to happen next in the market? is volatility still going to dominate trading? are the markets going to go up?
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are they going to go down? what is your prediction? >> i think you have both macro and microtrends next week. as you said in the lead there, about 20% of companies in the s&p reported earnings. but it really gets heavy next week. we have about 170 companies in the s&p 500 reporting, and about ten dow components. and earnings have been mixed. they have been okay. topline has been a little soft. as bob pisani said, only about 45% of companies are beat top line. it reflects the sluggish global economy that we have. >> so what is the message of these earnings, and how should investors use that information when they're making their investment decisions? >> well, again, we do think you're going to get a bit of a setback in the market. but longer term the economy is still growing. well would use that as more of a buying opportunity. if you look within the earnings what you're seeing is the company that has more stable earns path like consumer staples
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are doing okay, where the more cyclical-oriented companies are the ones that seem to be disappointing here. you're paying a pretty steep valuation differential for the stable earnings companies like consumer staples. so we would actually start to look to rotate the other way, thing the economy is going to improve and get into more cyclical areas like technology potentially. >> oh, you would get into technology? you see bargains because they've been so atenown over the lastouple of weeks? >> yeah. i think the valuation differential is so stretched at this point, you find a lot of the big stable consumer staples companies trading at 20 times earnings, where you see a lot of the technology companies trading 10 times earnings. so about half the valuation. and we do think there is some good value there as the economy does improve. we think that's a better stunt. >> i want to ask you about economic numbers. next week we are getting economic numbers on housing. and also we're going to get a sense of how the economy grew in the first quarter with that gross domesticroduct gdp number coming out. how is that going to impact
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action next week do you think? >> i think the components and the mix of gdp growth are going to be very important. what we saw in the fourth quarter of last year was a really big drag in terms of government spending. and that's not likely to repeat here again in the first quarter. but that's what investors are going to be focusing. i think consumption will stay okay, which has been pretty good all throughout in here. but edo know the first two months of the quarter were much stronger than the third month march, and we do know the data so far in april has been soft as well. it'sore of the mixn tms of growth, how that sets us up nor second quarter and going forward that investors are going to be looking at. >> andrew, thanks for the overview. thank you very much. thanks to andrew berkeley, chief portfolio strategist at oppenheimer & company. turning now to our market focus. we begin with general electric. it reported solid earnings that came in line with analysts estimates. but jeff immelt recalled the quarterly numbers mixed and said the first half of 2013 will be
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challenging because of weak industrial demand. shares of dow component ge tumbled more than 4%, weigh do you think the blue chip average. the stock closed at $21.75. capital one was a bright spot in today's trading. its first quarter profit beat analyst estimates by 18 cents, and that was thanks to improved lending margins. the company also said it's seeking approval to buy back shares. capital one gained almost 6 1/2%. that's its biggest gain since november of 2011. it closed at $56.17. kimberly-clark, which makes kleenex and huggies, among other products, posted higher profits and raised its forecast for t rest of the year, citing strong growth in international markets and lower costs. kimberly-clark touched a new all-time high today before closing at $106.10, up almost 5%. honeywell also a winner, reporting better than expected earnings on increased margins. expenses fell slightly, and honeywell increased the low end
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of its four-year profit guidance. investors snapped up the stock. honeywell up almost 4% to $74 a share. video game stocks gained despite a research report saying sales were off 10% in march as customers wait for new consoles to be released. still, new game launches help drive software growth for the month. investors bid up take 2 interactive, almost 4% acti vision and electronic arts about a percent a piece. pepsico and the spin-off from kraft foods. reportedly nelson peltz's tryon hedge fund has taken big stakes in both companies, about 1.5 billion in pepsi. there is speculation that peltz and other investors could push pepsico to spin off frito-lay and combine it with month delies. mondelis up more than 5%.
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abbev and constellation got the go ahead to complete the grupo modelo. they sold a brewery as well as over assets and acquire the 50% of modelo it doesn't already own. investors cheered the revised deal. ab in bev gaining more than 1 1/2%, constellation up almost 2 1/2%. and a new ticker symbol trading on the new york stock exchange today, seas, seas for seaworld. the amusement park company made a splash in its debut on wall street. the ceo rang the opening bell at the big board. you'll remember we told you last night that the company raised $702 million after pricing its shares at $27 each. they surged 24% on their first day of trading to close at $33.52. now earlier today i spoke with jim atchison and began asking him where is seaworld's growth going to come from.
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>> we have a lot of ways to grow. our core business is very strong. we operate 11 parks around the country, and we're generating great growth through them. we have other ways like our intellectual property, our brands and trademarks that we can monetize as well moving forward. and that's a strength of ours. and then there are other new park concepts that we can look at. we're opening a new park in california this year, ayachtica water park. >> but you face a lot of competition from people like disney, six flags. what are you going to do to get more people come to your park? >> i think focus on having a different sheet of products. we have 57,000 animals in our care and the know-how to care them. we present them in a way that inspires people. as long as we stay differentiated, people connect with that. >> so a day pass costs from $80, $90. are people ready to pay that much? >> sure, sure. we have millions and millions of people who have already paid that much. think about it, though, it's a great value if you compare the cost of going to a football game, a basketball game, you
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know, really, and those are maybe three-hour experiences. people are in our parks for eight or nine hours sometimes there is a lot of value. >> given the tragedy at the boston marathon and new worries people having being in large public gatherings, what impact might this have on your attendance this summer? >> as awful as the events were, i think we all realize that this is something that we can't reconcile and shouldn't treat as the norm. i think americans are more resilient than that. they recognize in the face of terror not to respond to it in that way. i thk pele are going to be willing to get out to resume their lives. always remember and never forget that event, but i don't think they're going to change their lives. that's why you do something like that. >> is seaworld taking any action to step up security? >> you know, we don't talk publicly about our security measures. but we're very confident with what we do and how we're doing it. we're always revisiting, always revising what we have. but we don't talk about the measures we have in place. >> so you raised a lot of money today. what are you going to do with all that cash in the public
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offering? >> we'll be de-levering with these borrowings, with this ipo. so we' be reducing some of our borrowing. some interest expenses and that helps everybody and our shareholders for sure. >> you came public at a very difficult time. this week we had all of the big stock sell-offs. what do you think seaworld has going for them? >> i think the sector has proven to be more resilient than people thought. the current recession, you've seen the whole theme park sector really acquit itself nicely, perform quite well. and we're no exception. so i think when you look at the sector, it's a more defensive space than you might think. and in our case, we're a total return story. we are pay agonize dividend with this offering. we feel good about the offering that we have. >> it is very unusual that you said you're going to be offering investors a dividend. very rare for a new public company to do that. why did you decide to offer a dividend? >> it speaks of the strength of the company. we generate a lot of free cash flow. we're looking at a total return for our investors. a dividend is a big part of that. that's a solid part we can
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offer. >> do you think that's going bring more investors to buy into the stock? >> people are look for yield these days, for sure. and that's certainly an advantage. >> and the seaworld ipo by the way is one of the five biggest offers in the u.s. this year. still to come on the program, the housing market showing signs of strengthening. and with the nation's home builder schedule due to report their earnings next week, we take a look at the one company you should watch. but first, here is a look at how international markets fared today.
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boeing grounded 787 jetliners could soon be flying again. the federal aviation administration approved boeing's redesign for the faulty battery system. the next step in getting the plane back in the air. boeing's ceo said this clears the way for us to return the planes to flight. the new batteries will be shipped immediately. next week the federal officials will tell airlines how to make changes to the plane and issue the final approval to fly the plane with the modified system. meanwhile, the nation's largest pilots union has teamed up with representatives of the major airlines to sue the federal aviation administration over its decision to furlow air traffic controllers. the lawsuit asks a federal court to block the furloughs, which are scheduled to kick in on this sunday. the furloughs taking place at regional airports across the country are the result of billions of dollars in automatic federal spending cuts approved by congress in the so-called sequester legislation. honda is recalling more than
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200,000 minivans and suvs in the u.s. and canada to fix a shifter problem. the models on the recall list honda crvs and odyssey minivans, model years 2012 and 2013 and the 2013 models for the acura rdx suvs. honda says the device that prevents drivers from shifting out of park without pressing the brake pedal may not work properly in below freezing weather. now some of the nation's largest home builders report earnings next week. this as sentiment among the builders slipped in april for the third straight month. what should investors be looking for? tonight we conclude our week-long series earnings spotlight with real estate correspondent diana olek taking a look. >> reporter: demands for newly built homes is rising, but new homes are not rising fast enough to meet it. >> the home builders are themselves worried about their ability to provide the housing in a lot of instances.
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>> reporter: land, labor, and credit are standing in the way. credit in particular as banks are unwilling to lend into a still shaky sector. >> i think for the short-term, the people who have the cash will have the advantage. >> reporter: and that's the big builders, flush with cash from the equity markets. four builders report quarterly earnings next week. which one to watch? analysts say texas-based dr horton. >> they're the largest builder in terms of the number of closings, and they're in the most markets. so they'll probably be able to tell us not only about orders, but also about other things that are important to folks now like what are materials prices doing, how are you negotiating with suppliers. >> reporter: in dr horton's stock has out-performed many of the home building peers recently as the big builders have seen solid growth of orders in new homes. dr horton builds lower-priced entry level homes which is where much of the demand is now. the move-up market has dropped off. >> dr horton itself has the representation of being a first-time buyer company.
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and i think that's a lot of what they do. they actually did a pretty good job over the last couple of years shifting their product to meet the demand of who was in the market. so they did shift a little when the move-up buyer was there. they can shift back to the first-time buyer if that buyer comes back into the market. >> reporter: first-time home buyers have always been crucial to the builders. but tight credit and competition from all cash investors have kept many of them sidelined. these buyers usually make up more than 40% of the home buying market. today they're at roughly a third. the builders are trying to get them back in the front door. but with rising construction costs, home prices will likely do the same for nightly business report, i'm diana oleck. time to our guest who says investor sentiment is improving, even with all the stock market volatility. he is hank smith, chief investment officer at haverford investments. you know, hank, it's hard to see investor sentiment improving, especially after day like today with everything going on, not just volatility, but some of
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these real world events. what are clients telling you? >> well, first of all, i think clients for the first time are starting the sense of a little bit of confidence both in the economy and in the markets. and this is because we're four years removed from the financial crisis and the recession. and these flare-ups in europe are becoming less frequent. so a lot of the big macro headwinds seem to have gone away. they're a little less concerned. investors are demonstrating a little bit of confidence, tiptoeing into the market and we're seeing that with fund flow. >> and you're telling your clients who are tiptoeing in at they should balance their portfolios between defensive and offensive stocks and a good dose of what you call steady eddies. let's look at some of the steady eddie stocks. mcdonald's at the top of the list why. do you like mcdonald's? the stock was down quite a bit today on disappointing numbers.
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>> well, it's a classic steady eddie in that its earnings aren't impacted by the near term direction of the market. it's also a global play and an emerging market play, all combined into one. so it's a terrific defensive company. >> and what about johnson & johnson. that's the other steady eddie th you talk out. >> well, look. people are still going to buy band-aids. they're still going to buy tylenol. they're still going to buy many of the medical devices and drugs that they provide. so you're going get growth. you're getting an above average dividend, a better than bond dividend yield, and you're almost assured of annual increases in dividends. so you get your cake and you get to eat it too. >> all right. on the other side of the equation, you have some cyclical stocks that you are recommending here. you have union pacific, ticker symbol unp. tell us about that. >> well, look. even though it's a domestic company, it's an emerging market play because of all the traffic from east to west, feeding to
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asia and the emerging economies. plus it's a play on the revival of manufacturing and industry in the united states. and that is taking place. >> all right. and dupont, which should be reporting earnings soon. you like this one, even though the stock has been in a trading range in the mid-40s. tell what's the attraction. >> dupont has been in a decade-long transformation from a traditional chemical company to a light scientist company focusing in ag-biotech, agricultural biotech. so they are part of the solution of feeding the world, and that is a long-term trend that though have a lot of benefits. this is a company that is becoming a much more consistent and steady than it was a decade or two ago. >> and now for the final stock, apple, which doesn't fit in either one of these categories. but you saw it's a terrific buy. today the stock was down again. it's now trading at $3. why are y sing that put
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money into apple now? >> a year ago, there was too much euphoria. today there is too much pessimism. look, apple is reflecting an absolutely worst case scenario with earnings there to be reported this tuesday. there is likelihood it's not going to be that bad. and if tim cook can lay out a plan for a capital outlays to shareholders in terms of dividend increases and share buybacks and reassure investors of their products and their vision for products, i think this stock could be much higher next week. >> all right. very interesting information. thank you so much, hank. any disclosures to make? do you own any of these stocks? >> we own them all, and i own them all personally. >> thank you so much. have a great weekend. hank smith of haverford. >> thank you. and coming up next, as the price of gold and silver plunge, we'll take you to one of the country's largest coin shows to see who is buying and who is
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selling. but first, a look at commodities, treasuries, and currencies. next week on "nightly business report," we'll have earnings news every day as ten dow firms and 172 s&p00 companies report. and we'll interview caterpillar's ceo doug oberhelmin. now, we've been talking a lot about the downward movement in precious metals. we're continue tock on the
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lookout to see what people are doing when it comes to buying gold and silver. well, the largest coin show on the west coast kicks off today, and that's where we find jane wells, taking the pulse of the gold and silver bugs. >> very flashy, very nice. >> reporter: if you want to know how people feel about gold, don't look at the markets, look at the coin shows. >> on the entire floor, we're expecting business in the tens of millions of dollars. >> reporter: at the santa clara county show in the heart of silicon valley, thousands came to buy and sell, mostly buy. >> you see more buying. people interested in buying. >> why? >> they're taking advantage of the dips. >> reporter: kerry is buying. he is a wholesaler whose firm has been involved with big auctions, including one for a rare coin which sold for a record $10 million. what kind of coin is it? >> a 1794 silver dollar. >> for $10 million? >> $10 million. >> reporter: the volatility in gold prices recently has brought out some panic selling. but buyers have piled in, and prices are stabilizing. the challenge at a show like
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this is finding someone willing to sell for a reasonable price. >> there just aren't that many willing sellers at this price, because they don't think the published price is the real price. >> why is that? >> for every five ounces of paper silver or gold, there is probably only one ounce of physical. and when they realize that, they say i'd rather have the physical than the paper. >> reporter: with gold reaching new highs today, that the buzz here? this is my report from the same coin show two years ago when prices were hitting record highs. what is the hot buzz here today, do you think? >> silver. silver. everybody wants to buy silver. >> reporter: two years later, the price of silver is down 40%. but silver eagles are still hard to find. they are still in high demand. >> going out and finding silver coins, silver bullion is exceedingly difficult to do right now. >> reporter: it appears no matter what happens with price, some will not give up the notion that an invesent in silver and gold always shines. >> it's just a market that is filled with, you know, contradictions.
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>> reporter: for "nightly business report," jane wells, silicon valley. >> and that is "nightly business report" for tonight. have a great weekend, everyone. tyler and i will see you right back here on monday. >> "nightly business report" has been brought to you by -- >> interactive financial multimedia tools for an ever changing financial world. our dividend stock adviser guides and helpsenerate inco during a period of low interest rates. options profits helps educate beginning and seasoned options traders. action alerts plus is a charitable trust portfolio that provides trade-by-trade strategies. online, mobile, social media. we are
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Nightly Business Report
PBS April 19, 2013 4:30pm-5:00pm PDT

News/Business. Susie Gharib, Tyler Mathisen. (2013) New. (CC) (Stereo)

TOPIC FREQUENCY Boston 10, Dr Horton 4, Us 3, Bob Pisani 3, Honda 3, S&p 3, Honeywell 3, Ibm 3, Eddie 3, Pepsico 2, Hank Smith 2, Tyler 2, Hank 2, Boeing 2, The Earlymixed 1, Wa 1, Pisani 1, The Economic News 1, Caterpillar 1, Apple 1
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